Value Investing Strategies of Warren Buffett and Benjamin Graham

Warren Buffett’s Berkshire Hathaway Inc. on Tuesday agreed to buy Burlington Northern Santa Fe Corp., a $34 billion acquisition that if approved will be the biggest in Berkshire’s history.

Burlington Northern, the nation’s second-largest railroad, is the biggest hauler of food products like corn and coal for electricity, making it an indicator of the country’s economic health.

Analysts say Buffett is planting both feet in an industry that is poised to grow as the economy gets back on solid ground.

Berkshire Hathaway already owns about 22 percent of Burlington Northern and will pay $100 a share in cash and stock for the rest of the company.This is a 31.5 percent premium on Burlington Northern’s Monday closing price.

Shareholders have the option to convert their stock for a cash payment of $100 per share or receive Berkshire Class A or Class B common stock. Up to 60 percent of the deal is cash and 40 percent is in stock.

Berkshire’s board also approved a 50-for-1 split of its Class B common stock for holders of smaller amounts of Burlington shares who opt for a share exchange rather than cash.